Utah Real Estate & Mortgage Blog

HUD recently removed the $100 down incentive to buy a HUD house.

Did you know that?    There’s no news of this on the internet.  No public announcement that states it no longer exists via any HUD website or any announcements to our local mortgage lenders and or Realtors.    I recently attended a HUD Home training course and learned of the change in person.

What is a HUD home?  It is a single family residence, 1-4 units, that had an FHA loan to secure the mortgage.  When these types of properties are lost to the bank in a foreclosure, they become HUD Homes.  You do not have to be a first time buyer to buy a HUD home.

Local mortgage lenders and Realtors®  probably believe this program is available.  Some Realtors® will begin to find out that their offers might be denied due to the recent change.  Do your homework, each state is different and other states may offer the program.   I had a client that was looking to purchase a home with this program.  I emailed him during the HUD training class to break the news.   Does your agent or loan officer know about this change?

The conversion of the HUD marketing and management contract had recently allowed the $100 down incentive to promote buyer interest for several years.  Now that HUD has transitioned to a new 2010  contract, they have decided to remove this incentive  in the state of Utah.

DON”T DESPAIR!   You can still buy a home with No Down Payment through our local Utah Housing Program.  HUD homes are still fantastic deals and in some cases ready to move in with little or no repair.  Also, my preferred lenders offer a 30 yr fixed rate loan that can include the rehab costs to fix or update the home.  You can make energy efficient changes, fix the leaking roof, replace the windows, etc with the same loan you use to purchase the property.

Contact me today if you would like to learn more about buying a HUD home OR if you have questions about the FHA rehab and energy efficient loan programs.

801-792-5040

Zoom Real Estate

Buyer Beware…You might want to reconsider that decision and go with a Mortgage Lender the next time you buy a home in Utah.  I want to share a recent experience I had as a Utah Real Estate Buyer’s Agent.

This was for a purchase of an owner occupied home that was less than $150,000.  This buyer got approval from the broker back in September 2010.  We wrote an offer at the end of September and were under contract within the first few days of October.   We should have closed on this client’s home last week.

WE DID NOT CLOSE.

As of today, we are still waiting for formal approval from the broker.  The loan officer has communicated that he/she has done everything possible to speed up the process.  My client is now at risk of losing thousands of dollars in deposits and inspections due to the broker not closing the loan on time.  Every week, we were told that everything is OK and it should only be another day or two.  It has been more than 3 weeks in underwriting.  Is this an isolated problem that does not happen that often?  No.  Let me explain.

A couple of years ago, mortgage brokers were put on a pedestal by the banks and their loans were given priority.  After the collapse of the banks/lending, banks started to push mortgage brokers out of the way.   Many national and local banks shut down their wholesale lending operations (these were the divisions that handled mortgage brokered loans).    In the past I was a California & Utah Mortgage Licensee.   I have had experience in working with both brokers and lenders.  I understand what it takes to get a home loan and close on-time.

Since my move to only being a Utah real estate agent, I have never had deal not close on-time.  I went back and looked at the financing my clients used to purchase these properties.  NOT ONE was with a mortgage broker.  They were either with a Utah lender (bank, credit union, in-house lender) or cash.  Then I went back and looked at all of Zoom Real Estate’s closed purchase transactions for the previous year.  I looked at if the deals closed on-time and if they used a broker or lender.

• Of the deals that the buyer used a mortgage broker for the financing…85% of them DID NOT CLOSE ON-TIME.
• Compare this the deals that the buyer used a mortgage lender for the financing …1.5% of them DID NOT CLOSE ON-TIME.

I am writing this blog post today to warn Utah home buyers to beware of mortgage brokers if you want to close on-time.  It is difficult for brokers to close on-time because they do not have the resources to do so.  Lenders have in-house underwriting, control of the loan file, and better access to the team working on your file (AKA..your home loan).

If you are being given the run-around from your mortgage broker, give me a call and I would be more than happy to recommend several local UTAH lenders to help you with your home purchase.

Kris (801) 792-5040

Zoom Real Estate Agent

HOW?

Three different lenders I work with contacted me today about home loan rates.  All three of them are able to do a 30 yr fixed rate FHA or VA  loan at 3.75% (apr 3.99%).  WOW!  With the loan rates getting even better today, you can save an estimated $72 a month (see example below).

Saving $72 a month on your Utah home payment is great, but how does $72 a month = $25,000 in savings?  Look at the total interest paid over the life of the loan as given in the example below.  In addition to the lower payment, you will save thousands in total interest paid.  What a great day to buy a home.

Interest Rate: 3.750% (3.99% APR)

Loan Amount: $250,000.00 ~

Term of the Loan: 30 years

Monthly mortgage payments: $1,157.79 ~

Total interest paid over the life of the loan: $166,804.04

VS.

Interest Rate: 4.25% (4.49% APR)

Loan Amount: $250,000.00 ~ Term of the Loan: 30 years  

Monthly mortgage payments: $1,229.85

Total interest paid over the life of the loan: $192,745.91

Buy more home today than yesterday.  Contact me today to find out more about these rates and loan programs. 801-792-5040

November Update on Utah Home Lending:

• There is money available as of November 4, 2010 for Down Payment Assistance (up to $10,000) throughout Salt Lake County.
• 100% financing programs available.  NO DOWN PAYMENT!
• $100 down payment HUD homes are available throughout Utah.
• Special Loan deferral programs are available in Salt Lake County (up to $20,000!)  No payment/No Interest on select homes.
• FHA rehab loans that allow you to buy a home through FHA and receive the money to rehab/repair a home at the same time.
• FHA  Energy Efficient Mortgages that allow you to update windows, appliances, furnace, hot water heater, insulation when you purchase a home.

If you have a steady job and decent credit, you may be a home owner before the end of the year.

801-792-5040

For Utah families in these current economic times, the dream of owning a home seems to be moving farther away. With expensive closing costs, a high down payment and other fees, some families don’t have the extra cash to get into a home. That’s when the Community Development Corporation and the Own in Murray program steps in to help.

In 2009, Murray City approved $25,000 from Community Development Block Grant funds to assist people who want to purchase a home in Murray. Qualified applicants received between $5,000 and $7,500 to help cover those extra out-of-pocket costs. For the current fiscal year, $49,000 has been set aside for Murray’s down payment assistant program.

Funding for the program is limited, so applicants are being encouraged to apply as soon as possible. Applicants must submit all required documentation, meet eligibility requirements, have a good debt-to-income ratio and meet income requirements depending on the number of family members working and living in the home. A chart listing income eligibility as well as a link to the application packet can be found on the Murray City website at www.murray.utah.gov.

Most down payment assistance loans have a zero percent deferred interest rate and for residents who stay in the home for 15 years, half of the loan is forgiven.

“I think we will be able to do seven loans this year,” Harper said. “If someone is looking to purchase a home, they should contact a Realtor with Zoom Real Estate for more information.”

In addition to the Murray City program, there are programs to help buyers in Utah County, Davis and Salt Lake County.  The money will not last long.  Contact Kris today at 801-792-5040 to learn more.

FHA mortgage insurance premiums approved to triple in 2010.  Last week, the House of Representatives gave the FHA power to raise the monthly mortgage insurance premiums it charges to its borrowers.
Currently, monthly mortgage insurance premiums are 0.55% of the unpaid loan balance, divided by 12.  The recently approved Federal Housing Administration Reform Act provides for an increase in monthly premium of up to 1.55 percent.

Despite the ability to charge 1.55 percent, FHA officials say an increase to 0.90 percent would be sufficient to self-insure its loans.

Assuming a $200,000 mortgage, the math to a homeowner looks as follows:

* Current Premium (0.55%) : $91.67 monthly mortgage insurance premium
* Expected Increase (0.90%) : $150.00 monthly mortgage insurance premium
* Maximum Increase (1.55%) : $258.33 monthly mortgage insurance premium

A increase in monthly mortgage insurance premiums will reduce home affordability for buyers in Utah.   If more of your monthly payment is going towards the mortgage insurance premium, then you have less money to pay towards the home mortgage.

The bill awaits companion legislation in Senate and final approval into law, but considering the House’s vote last week, it could happen rather quickly.  If you’re planning to buy or refinance a home using an FHA mortgage, you may find that waiting to take the next step could reduce how much home you can afford to purchase.

According to the Wall Street Journal, U.S. Consumer Reports, Money Magazine, State Supreme Courts, and many leading consumer groups…A buyer who relies on the listing or seller’s agent does not receive the same degree of legal protection as that afforded by an agent acting solely on behalf of the buyer.

For argument’s sake, suppose you see a Salt Lake property that is “just perfect” and you don’t have an agent yet. Do you make an offer with the listing agent to save the money of not having a buyer’s agent or to negotiate a better deal with the seller?  (No, I’ll explain in a moment – nothing is saved)

Most Utah real estate deals have two agents involved. The listing agent markets the house and represents the seller. The buyer’s agent represents the buyer. The seller pays the same commission to the listing broker REGARDLESS if there is a buyer’s agent.  If only the seller’s agent is involved (that is, he or she finds the buyer and represents the seller) then such an agent gets 100% of commission instead of 50%.

Listing agents who show you homes don’t represent your interests. They work for the seller, and their object is to sell the house at the highest possible price. If you haven’t figured out the trick by now, I’m telling you that you do not save money when you go through the listing agent.

Before the home is listed for sale, the seller has already contracted a fee with the listing agent.  This fee is not reduced if a buyer decides to not have representation and use the listing agent to make an offer.  Not hiring a buyer’s agent may cost you thousands. If a home was priced at $250,000, you may be overpaying by $25,000 or more on a typical sale if you use the listing agent! You pay nothing for my services as a buyer’s agent. Remember, the seller has already contracted a fee with the listing agent. The listing agent will split part of their fee with me.

When a buyer goes through the listing agent to purchase a home, this is called limited agency.  What is limited agency?

A Limited Agent represents both seller and buyer in the same transaction and works to assist in negotiating a mutually acceptable transaction. A Limited Agent has fiduciary duties to both seller and buyer. However, those duties are “limited” because the agent cannot provide to both parties undivided loyalty, full confidentiality and full disclosure of all information known to the agent.  For this reason, a Limited Agent must remain neutral in the representation of a seller and buyer, and may not disclose to either party information likely to weaken the bargaining position of the other; such as, the highest price the buyer will pay or the lowest price the seller will accept.

If you accept a limited agent, you are accepting you do not want the best price on a property.  In Utah, it is common for buyers’ agents to negotiate price/terms at 5%-10% less than list price.  Do you want to be limited when negotiating?   In simple terms, the sales commission to be paid has already been agreed upon in writing when a home is listed with a broker for sale.  The sales price has yet to be determined.  Why have a limited agent handle your side of the sale when they cannot disclose the lowest price the seller will accept?

Why should a buyer have their own representation?

* No-cost to the buyer.

* To negotiate the best terms and price on your behalf.

* For your protection.

What are your rights as a buyer? What does the seller warranty? What if somebody else makes an offer on the property as well? How do you get your earnest money back if things go wrong? Under what circumstances can you get your earnest money back? What if the home inspection reveals unpleasant surprises? What if your lender can’t get your loan together on time? When can you legally take possession of the property?

Don’t leave money on the table and go through the buying process without representation.  Hire a Zoom Real Estate buyer’s agent today.  “You can’t have partial loyalty. An agent either works for you or works for someone else.”

What should a home buyer do?

Speak to a Zoom Real Estate buyer’s agent BEFORE you go out looking at homes.  Secure your representation first, and you won’t have to concern yourself with accidently being represented by a listing agent.  We have buyer’s agents ready to represent you in all areas of UTAH.   If you are looking to buy real estate in Logan/Cache Valley, Ogden/Davis & Weber county,  Salt Lake county,  Utah county or even St George give us a call.

Contact me today to discuss hiring me to represent you as a buyer’s agent.

Call Kris/ Zoom Real Estate (801) 792-5040

Is this a realistic headline?  No.

Everybody is looking for a deal, so there’s a lot of competition in purchasing distressed or bank owned properties.  Good deals often average less than 7 days on the market because they have been priced to sell fast.  There are many buyers who are pre-approved or have cash in hand, waiting for new home listings to be announced.  Don’t miss out because you are not prepared for what homes are selling for in the zip code you are searching.

What do I mean?

Let’s talk about unrealistic home buyers.

Naturally everyone wants to get the most home they can for the least amount of money. This is in opposition to the home seller, who wants the most money for their home. This conflict is one of the things that make real estate sales challenging at times.  When the market starts a shift in an opposing direction, this conflict stands out.  Starting back in 2006 the shift in Utah real estate was starting to occur.  It has been almost four years and it has been our experience that home sellers in Salt Lake, Utah, Davis, Weber, and Washington counties are becoming much more realistic.

While it used to be quite common to hear sellers say things like, “But my neighbor’s home sold for “x” dollars last year!” sellers seem to be getting more realistic when it comes to their home’s value.  They are letting go of the attitude that their home needs to sell for what their neighbor sold for the year before.  A year is almost an eternity in the Utah real estate market.

Home buyers on the other hand seem to be losing their grip on reality.  Yes, there was a time when buyers were able to get significant savings off of the list price. While there is room to negotiate, we have not seen low-ball offers succeed in our local markets.   We often negotiate price discounts up to 10% – 20%, anything more is unrealistic in Utah.   Our market has stabilized from past volatility.

Here are some examples of recent conversations we have had with Utah buyers:

* We’d like to offer $40K under list price on a $175,000 home.

* We just short sold our home last month and are looking to buy now.

* The bank is out of state and doesn’t  know what the property is worth, let’s offer $100,000 less.

* I need a smoking deal on a bank owned home or short sale. I’m willing to pay 60% of list price.

* I refuse to pay a dime over list price on a short sale or bank owned home.

The answer for all of those comments above is “you can’t do/get/buy that”.  You might be asking yourself “why would I pay more for a short sale or bank owned home?”  Because there are multiple offers from buyers who are all looking for a good deal.  These homes are typically priced below market value to induce multiple offer situations.    This is why these homes often sell for more than list price.

Much of this type of thing comes from simply not understanding what is happening in the real estate market. And by “the real estate market” I am not talking about what you hear on network news or even your local evening news / newspaper. You need to understand what the market is doing in the specific area you are interested in. The term “real estate market” is just too broad and real estate is local.

Our agents at Zoom would be happy to provide you at no charge, specific pricing statistics on local Utah zip codes or a specific property.

As a home buyer, you may not know the details and current trends about your local real estate market. Most people buy a home every 7 – 10 years. We are up to our necks in this stuff every single day. This is what we do for a living and helping people understand the details of their local real estate market is what we get paid for.

Give us a call today to discuss your local market. 

You may reach Kris, Zoom Real Estate Realtor at 801-792-5040

While 3.5% down is still available to home buyers who use FHA financing, the  Federal Housing Administration has announced changes to the popular home buying program.  The changes are being implemented to increase the FHA’s income and reduce the agency’s risk on these loans.   There was talk before this week’s announcement that the minimum down payment would be increased to 5% down.  For now, the minimum down payment will remain the same.

Announced FHA Policy Changes:

Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending.
Up Front Mortgage Insurance is currently 1.75% of the loan amount.   After April 5th 2010, this is going to increase to 2.25%.  For a $180,000 purchase, this would cost a home buyer about $900 more.  In addition, FHA may increase the monthly mortgage insurance premiums later in the year.

Reduce allowable seller concessions from 6% to 3%.
Buyers that want a seller to pay their closing costs will be limited to a maximum concession no greater than 3% of the sales price.  This change is expect to occur by Summer 2010.

Update the combination of FICO scores and down payments for new borrowers.
Home buyers that do not have the required minimum FICO score may increase their down payment to 10% to compensate for the lower score.

If you have questions please call 801-792-5040

I get questions from buyers on a daily basis in regards to short-sales. I could probably write a book on the process of buying a short-sale or a foreclosed home, but I’m going to consolidate it down to a few paragraphs.

 There are three stages of a distressed property.

Step 1. Short Sale (Subject to 3rd party approval) – The seller is experiencing a financial hardship and they need to sell the home. The seller lists the home with a Realtor to find out they owe more on the home than it is worth (hence the term short-sale). The Realtor or the seller communicates with the bank and lets them know they are going to try to sell it short. The bank will usually not elude to what they will be willing to sell it for until an offer is on the table. The bank will say… “show us an offer and we will talk”. These homes are listed at a price that usually will not be accepted by the bank. Homes are listed to encourage offers and can be a bit misleading. When an offer is received and sent to the bank, it can take a couple months for them to respond (yes I said months). Typically homes have multiple liens on the property and ALL lien holders must agree before the home can be sold. Listings with this status can take up to a year to close on depending on many factors.

Step 2. Short Sale (Approved by 3rd party) – The bank has received an offer and has responded with either an acceptance OR with a “We won’t take this offer price, but we will take $XXX,XXX”. If the original offer was not accepted,  the first person to put in an offer at the approved price gets it. If you put in a lower offer then the bank will need to review offers again which could take weeks or even months for a response. After a bank approves a price you could close in a matter of weeks depending on the bank. If the price is approved, the bank usually has acceptance from the junior lien holders to sell the home as well.

Step 3. Foreclosure – The home never sold as a short sale and the home goes up for auction at the county steps. Junior liens are wiped out and if nobody bid on the home at the county steps, the home goes back to the bank. The bank hires a Realtor to market the home and generally prices it for a quick sale. The bank is usually quick to respond and wants to close ASAP. This is the easiest of the three steps.

Most of my clients avoid Step 1 listings as the price really is a shot in the dark. Be prepared to pay as much as 20% over the list price on a Subject to 3rd party approval listing. If you have a lot of patience to find a home, then buying a short-sale can be a great avenue. If you are looking to buy a home in the coming months, I’d recommend you avoid Subject To Short Sale listings.

Keep in mind distressed properties do not always equate to good deals.  There are many motivated sellers out there that are not losing their home and will sell at a great price. A lot of distressed properties need work and usually come with no disclosures from a seller going over any issues the home may have.

Today more than ever, it is important to have a Realtor on your side when buying or selling Utah real estate. Real estate has become more specialized over the years in an ever changing industry.

Contact us today at 801-999-8005 to talk to a Zoom Real Estate Realtor.

How many would enter a courtroom to defend oneself, knowing you would be going up against a trained prosecutor? Or how many would go into that same courtroom and ask the Prosecuting Attorney to defend you at the same time he or she is prosecuting you? Sound farfetched? There are some who wouldn’t even consider fixing their own plumbing or electrical problem without consulting a licensed professional in the field.

And yet, when it comes to possibly the most expensive and important purchase of one’s life (a home) suddenly the same person who wouldn’t think of handling their own plumbing issue is willing to risk it all by becoming their own do-it-yourself Realtor. Buyers expect the Listing Agent, who has a fiduciary responsibility to the Seller, to represent them with the same care and concern. It can’t and doesn’t work that way.

Why would any Buyer consider being unrepresented or allow oneself to be represented by the Listing (Seller’s) Realtor? The typical answer, I receive to this question, is “well, can’t I save money, or buy the house for less, if I don’t have my own Realtor?” The answer is no, at least not legally. That response indicates an incomplete knowledge of the Real Estate transaction process and a lack of awareness of the various and separate contracts involved.

When a Seller employs a Real Estate professional to sell his/her property, a contract called a Listing Agreement is drawn up. The parties to the contract are the Seller and Listing Brokerage. The future Buyer is not party to this contract in any way. This contract states all of the contractual obligations between Seller and Listing Brokerage. In this Agreement, the Seller has agreed to pay the Listing Brokerage a specified, negotiated Brokerage fee. Many times, the Listing Brokerage will offer and advertise to share a specified portion of this fee with the Brokerage who brings the Buyer. However, if a Buyer Broker is not involved, the entire Brokerage fee is kept by the Listing Brokerage. For a Buyer to ask the Listing Agent to alter that fee or in some fashion pay it to the Buyer would be interpreted as an illegal and unethical “kickback” and subject to legal action.

Also, by way of the Listing Agreement, the Listing Agent accepts a fiduciary and legal responsibility to represent the Seller to the best of his/her capabilities, and obtain the best price he or she can for the Seller.

The contract to sell the property is the Real Estate Purchase Contract (REPC). The parties to this contract are the Seller and the Buyer but not any Real Estate Brokerage. Any Brokerage fee being paid by a Seller is not discussed nor is it in any way a part of this contract. Incidentally, the Real Estate Purchase Contract has been revised, effective January 1, 2009. Many feel the new contract places more due diligence responsibilities on the Buyer than even before. The new contract’s former Seller Warranties in section 10.2 of the REPC have been removed. Wouldn’t you agree that before purchasing a home, it would be prudent on the part of a Buyer to not only have one’s own representation, but to ensure that his/her Realtor is educated in all of these critical changes?

If you are thinking of buying a home, I’d love the opportunity to assist you. Throughout your search, I will do my best to make an often stressful process run as smoothly as possible. I will also put my expertise to use in helping to negotiate the best deal for you.